USA Revives Nearly 40 Year Old Soft Lumber Dispute with Canada

In 1982, the US applied for countervailing duties on soft lumber exports from Canada.


Claiming that softwood producers in Canada are subsidized by the Federal and Provincial governments because most of the lumber is harvested from Crown properties, the claim suggests that it provides Canadian exporters an unfair advantage due to their collection of ‘stumpage fees’ from each government body.


Bringing you forward to a couple of years ago, then President, Donald Trump (2018) imposed a 20% tariff for all imports from Canada. The ruling was overturned by the World Trade Organization (WTO) and the tariff was reduced to about 9 percent.


And so the game goes. The US has again pushed for another increase which would double the tariff via countervailing duties and anti-dumping rate to over 18 percent. Susan Yurkovich, president of the BC Lumber Trade Council suggests that “American consumers who are faced with a market where prices are at record heights because supply cannot keep up with demand, will be harmful.


While the US produces and exports huge quantities of softwood lumber, they rely on Canada to provide over 75% of US imports by value. Ms. Yurkovich also calls on to end this recurring decades long dispute and to work with Canada to meet the supply and demand of ‘low-carbon wood products’ that the rest of the world needs.


In turn, Jason Brochu, U.S. Lumber Coalition co-chair suggests that Canada’s software lumber is “subsidized and unfairly traded”. He goes on to say that a US/Canada softwood lumber agreement would be open ‘if and when’ Canada claims it is serious in its negotiations.


According to CBC Canada, the US Commerce Department analysts say that the increased preliminary tariffs would negatively impact producer’s profits but would be unlikely to change prices for consumers.


Because this increase is a ‘preliminary tariff rate’, any cash deposit rates will apply until the finalized rates come into effect sometime in November 2021.


Mary Ng, minister of Small Business, Export Promotion and International Trade states that “US duties on Canadian softwood lumber products are a tax on the American people.” She goes on to say “We will keep challenging these unwarranted and damaging duties through all available avenues. We remain confident that a negotiated solution to this long-standing trade issue is not only possible, but in the best interest of both our countries''.


Summary


It is not easy to summarize an ongoing dispute that does not yet have a conclusion. Each country has their own set of predictable complaints with the present and future situation. As this dispute has died and revived over four decades, with favourable results gained from each side, the conclusion can go either way……but only up to the next time that one of the two countries becomes dissatisfied.


Resources


https://globalnews.ca/news/7884539/canadian-softwood-lumber-tariffs-latest/

https://www.cbc.ca/news/canada/calgary/tarrifs-softwood-lumber-may-2021-us-canada-1.6037224



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